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Zoning to Blame… Yeah, That’s the Ticket.

What’s to blame for the Seattle area’s out of control housing prices? If you read the local papers, you’ll hear all kinds of reasons. Booming local economy, running out of land, super-extra desirable climate, Microsoft/Boeing, you name it, they’ve claimed it (almost). The latest scapegoat: local zoning.

“Local zoning is the No. 1 enemy of work-force housing,” Ron Terwilliger, chairman and chief executive of Atlanta-based developer Trammell Crow Residential, said at a talk hosted by the Seattle chapter of the Urban Land Institute, a national land-use think tank.

Seattle created urban nodes that mix apartments and condos with stores, services and transit. But, with the exception of a recent decision to allow backyard apartments in southeast Seattle, elected officials are reluctant to increase the number of homes allowed in single-family zones, which take up 65 percent of the city’s land.

“It would seem to me like at least your single-family zoning ought to have some flexibility,” Terwilliger said in response to a question on the matter from Seattle Planning and Development Director Diane Sugimura. “It seems like an overallocation of single-family.”

Last year, the typical single person in Seattle earned enough to buy a home for just under $200,000; the typical family of four had enough to pay just over $280,000, the Department of Housing and Urban Development said. Median prices were about $450,000 for a house and $290,000 for a condo.

Someone earning 80 percent of the median income could afford the $1,010 monthly rent for an average one-bedroom Seattle apartment, but not the $1,324 average cost for a one-bedroom unit built from 2004 through 2006, according to figures from HUD and Dupre + Scott Apartment Advisors.

The cost of urban housing leads many workers to live farther from cities, adding to commutes that cost workers money and time, Terwilliger said. This also is becoming an economic-development issue, he said, as companies move to places where their employees can afford homes.

Allow me to clarify the “almost” in my text above. You may notice that of all the claims the local press makes about why prices are so high, they never bother to mention the two biggest factors: loose lending and “buy it now” mentality. I don’t doubt that zoning, land limitations, and the like have some effect that tends to push prices higher, but I think they’re a red herring when it comes to the price explosion we’ve seen in the last 5-8 years.

Which is more likely, that Seattle’s home prices skyrocketed due primarily due to local factors (zoning, local companies, etc.), coincidentally over an almost identical time line as similar gains across the country, or that national factors (lending, psychology, etc.) pushed Seattle home prices up along with everywhere else? I’m going to have to go with Occam’s razor on this one.

(Aubrey Cohen, Seattle P-I, 09.19.2007)


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

39 comments:

  1. 1
    Grvetti says:

    er… uhm… I’m no rocket scientis but how does mowing down a $500K Craftsman Townhome and putting three $500K Luxury Townhomes ontop of the old lot increase affordability?

    Well, there’s the simple elixir for home prices that are too high, don’t buy any of them and watch the price drop.

  2. 2
    deejayoh says:

    How about this as a reason:
    % Home ownership in Seattle (US Census/ACS)
    2000: 48.4%
    2006: 51.9%

    This is a 3.5 point increase, or alternatively – a 7% increase on the base. That’s what is putting the pressure on prices – and this increase in demand was driven by easy money and loose lending standards. As Tim pointed out in his last post, there has been no supply constraint relative to population growth. Maybe there will be someday, but not today.

  3. 3
    on topic says:

    what about traffic and fuel prices?

    traffic and high fuel prices should work together to increase the cost of housing in and near the city.

    but i guess they’d have to show slower price growth in outlying areas

  4. 4
    B&W Nikes says:

    I don’t know that zoning isn’t a factor, what is allowed to be built certainly influences what is available to purchase. What about lenders only willing to make reasonable financing available to builders and developers who are able to guarantee an extraordinarily high profit through either scale or luxury building? A lot owner who tears down an existing structure and multiplies the former lot value by >300% through subdivision isn’t trying to squeeze anyone out as much as stay solvent with their project and make a profit, however humble or pretentious. My question: does the zoning wag the finance, or does the finance wag the zoning?

  5. 5
    Formernoreasta says:

    Where did you find a $500k Craftsman?

  6. 6
    gregory wharton says:

    As somebody who deals with zoning and land-use regulation on a daily basis, I can tell you with complete certainty that these regs have a gigantic effect on housing affordability (increasing costs by lots and lots).

    Even leaving aside development restrictions such as setbacks, height limits, parking requirements, open space minimums, and other such things, let’s look at one particular piece of the puzzle: permit review times.

    Now, back in the 1970s, the typical review time for a typical apartment building was something like 3 months. That same project, if it’s over the SEPA threshold (and thus requires Design Review and SEPA reviews) could easily take two years to get approved. If there are any additional complications, such as slopes, wetlands, shorelines, or any of a couple of dozen other conditions, then that review time only increases.

    What is the cost of that delay? If we’re looking at a standard 50×100 infill lot, then at current rates we’re looking at something like $150,000 per door in land costs for townhouse development (which is actually a little on the low side compared to what we’re seeing in a lot of neighborhoods these days). For an L3 site, which could be developed with four townhouses, the base cost to the developer of buying the land would be about $600,000, of which usually at least 80% is financed. Land financing is usually a point or two over regular mortgage rates, so every month that goes by costs the developer around $5,600 in what we call “carry costs.”

    Strictly in terms of time (i.e. not counting review fees and all the other junk the City makes you pay for), what is the cost difference of the two review times?

    3 months = $16,800 divided by four = $4,200 per unit.

    24 months = $134,400 divided by four = $33,600 per unit (almost ten times as much)

    Since the permit itself also costs around $2000 to $3000 per unit, if you buy a new townhouse in one of these developments, $35,000 or more of your purchase price is simply a cost premium associated with the permit review (developers don’t eat these costs…the people who buy houses eat these costs). That doesn’t even count all the additional costs associated with regulatory restrictions that reduce development density. It also doesn’t count the loss of value associated with many of the stupid things the code mandates for new developments. Nor does it count things like user fees or impact levies. All that stuff adds even more to the cost of every unit of housing that gets built, often approaching or exceeding 25% of the total cost of the unit. A $400,000 townhouse probably has something like $80K to $120K of regulatory-related price upcharges associated with it.

    That’s not a trivial cost impact. With projects that take longer to get approval (condo or apartment towers and things like that, the per-unit costs only increase).

    Nor is this cost impact really a matter of dispute. I encourage you to read Glaeser and Gyourko’s seminal study on the subject: The Impact of Zoning on Housing Affordability.

  7. 7
    gregory wharton says:

    Also, you might want to take a look at this newer study from Harvard on the impact land use regulation has had on prices in Boston.

  8. 8

    I THINK THE SEATTLE HOME PRICES GET HIGHER WHEN THE SEAHAWKS WIN

    Hades, my wild guess is as good as any.

    The actual convoluted array of factors affecting home prices going up (best case scenario) or down (worst case scenario) are summed up in this recent news article from New York [enjoy]:

    http://nymag.com/realestate/features/37654/index1.html

    P.S., if any of you think that the best case scenario for house prices is the future, I imagine you also see gas going back down to $1/gal too by 2010.

  9. 9
    James says:

    So I saw a $750k Wallingford listing today where the seller will finance $675k at 7.5% for the buyer who pays a $75k down payment. This is supposed to be a buyer’s incentive? I don’t get it. It seems to me that only loose lending can drive this type of behavior (marketing).

  10. 10
    biliruben says:

    GW – I’ve read a bit of Glaeser, and while he’s a bright guy and I certainly agree with some of his theories, suggesting he and his ideas are uncontroversial is misleading at best.

  11. 11
    deejayoh says:

    I think we will easily solve the permitting time issue in the next 12 months, as we start building half as many houses.

    Builders are historically their own worst enemies. As in practically every facet of the RE business, there are no/low barriers to entry so as soon as the market gets good it fills up with numb-nuts who think they’ll make a killing. Personally, as a taxpayer, I have no problem with the fact that the city didn’t double capacity to issue permits.

    And I don’t buy the “developer doesn’t eat this cost” argument. Contractors who have a cost + model can pass it on, but Developers want to extract every dollar they can out of a place – and the market sets the price. So in then end – Margin = Market Price – Total Costs, and the permitting costs come out of margin.

  12. 12
    James says:

    It seems that zoning restrictions can come into play only if vacancy rates are low. Aren’t they higher than normal in the Seattle area?

  13. 13
    MisterBubble says:

    “As somebody who deals with zoning and land-use regulation on a daily basis, I can tell you with complete certainty that these regs have a gigantic effect on housing affordability (increasing costs by lots and lots).”

    That isn’t the question, Greg. The question is: have these costs become so much worse during the last five years, that they explain the spectacular, un-precedented run-up in prices that occurred during that time.

    And obviously, the answer is no.

    Otherwise, there’s no doubt that housing costs are influenced by regulatory costs — that registers an 11 on the duh-O-meter.

  14. 14
    MisterBubble says:

    Incidentally, you “running out of land” apologists….check out the results for a search for “canal station” on Craigslist.

    (Boy…all of those folks must be pretty lucky to be renting out all that land! Haven’t they heard? We’re running out!!)

  15. 15
    bigdollordog says:

    gregory wharton said,

    As somebody who deals with zoning and land-use regulation on a daily basis, I can tell you with complete certainty that these regs have a gigantic effect on housing affordability (increasing costs by lots and lots).

    *******************

    your right, if you took all the red tape it takes to build a simple little houes in Seattle it would go to the moon and back,

  16. 16
    Denny Retrograde says:

    With the extremely limited exposure I’ve had to design review and zoning issues, it seems developers and architects don’t review the compliance of their proposed projects especially thoroughly before submitting plans; accordingly, DPD staff really have to scrutinize them and send them back for revisions time and again. That adds to delays and costs for everyone, but at least the fox isn’t guarding the henhouse. Without enforcement and scrupulous review, developers and the architects they employ would quickly run roughshod over our democratically-enacted regulations and carefully-prepared neighborhood plans.

  17. 17
    greenthum says:

    gregory wharton said,

    As somebody who deals with zoning and land-use regulation on a daily basis, I can tell you with complete certainty that these regs have a gigantic effect on housing affordability (increasing costs by lots and lots).

    **********************

    As I’ve always suspected, “Government is the problem!”

  18. 18
    what goes up comes down says:

    Is zoning the reason the number of listings keeps going up? Greg if zoning was the problem why didn’t it show up in the 90’s — a direct answer would be fine.

  19. 19
    Jay says:

    “They aren’t making any more land”…

    Well, I would say that our rapidly increasing inventory is a pretty damn good substitute. Lets’ just call it “Buyers Equivalent Land”…

  20. 20
    Jay says:

    Gregory

    Zoning costs certainly add something to the cost of construction. Not enought to explain house price increases here or elsewhere. In inflationary times and bubbles, builders could pass those costs on to buyers. In housing downturns and bursting bubbles they can’t. So from now forward I’d say builders will be eating some of those costs. You can add up all your costs, apply a margin, and try to sell anything. If people have no desire or ability to pay for it, it won’t sell even if the cost components and margin are all appropriate. The solution is that land prices will fall to make housing affordable even if consturction and permit costs don’t. Ultimately the prices have to reflect consumers abiltiy to pay in relationship to househould income.

    In your analysis of why there is not a housing bubble you just missed the fact that land prices will fall. That plus the fact that there is a very good possibility that commodity prices will drop as the globlal impacts of the credit crunch ripple worldwide in the next 12-24 months. The deflation threat is more real than many people currently recognize. Funny thing is that Bernanke gets it – why else do you think he dropped fed funds rates 50 bp in the face of the dollar near all time lows and the stock market near all time highs?

  21. 21
    Ira Sacharoff says:

    You would think that because the permitting process in Seattle was so cumbersome and expensive, and that labor and materials were so expensive, it would strongly discourage builders from building here. Is that the case?
    Maybe, but they’ve sure overcome that discouragement. For example, Columbia City used to have a lot of houses on fairly large lots, now there are a lot of townhomes/and or single family homes on zero lot lines.
    Is this a good thing? Again, I don’t know. It increases density, so theoretically it centralizes services and makes retail, restaurants, etc. within walking distance and that’s appealing, sure. But one of the things I always liked about Seattle is that much of it didn’t feel like a city.

  22. 22
    gregory wharton says:

    From personal experience, I can again say with complete certainty that zoning and permit reviews have become an order of magnitude more onerous over the last eight years. Since there is a time lag in building of about two or more years, it would not surprise me at all to find that those additional regulatory costs have contributed significantly to the housing price run-up. In addition to the increased review costs, we have also “gained” several new and very restrictive areas of land use regulation in the city, the most significant of which is the Critical Areas Ordinance. This one new law has had an enormous impact on development in the city, taking huge areas of property out of the category of developable land and dramatically increasing review overhead on permits associated with any ECA site.

    Does land use regulation and permit overhead explain ALL of the run-up in housing prices? No. But it explains far more of it than most people realize.

    As for the comment about permit review times being increased due to poor documentation on the part of applicants, that is simply not true. In the early 1990s, we would regularly submit four hand-sketched sheets for MUP applications for even large projects, and they would get reviewed and approved in much shorter time frames than we are now seeing with 40-50 sheet detailed CAD-drawn sets. DPD commonly uses lack of applicant information as an excuse for their poor performance, but that is simply a smokescreen for more systemic problems in the whole review system. From my perspective, it’s clear that DPD reviewers have started treating the process like academic peer review rather than a reasonable code compliance check. They are also using the correction process to buy themselves review time in the process rather than meet their review deadlines. I saw this become very prevalent after the state passed some laws requiring local jurisdictions to approve permit no more than XX days after receiving a complete application. The loophole in that law was the “complete” part, which could be put off indefinitely so long as corrections could be claimed to be necessary. Now, with reviewer workloads being so large, the reviewers seem to be using the issuance of corrections to get the project out of their inbox before the fact that they’re too busy to look at it impacts their performance reviews or prompts trouble from the applicant. The corrections being sent out now typically contain one small borderline legitimate item and dozens of filler items to pad the thing out and buy time. Two months ago, I received a correction notice from SDOT that contained three pages of single-line small type listing dozens of corrections on typos and spelling and punctuation errors! Why on earth are they issuing correction notices on things like that? That’s not their job. But, every time they issue a correction notice, it buys them on average six weeks: 2 weeks for the plans to get back to plans routing for us to pick up, one week for us to pick them up, make our corrections, and resubmit, a week or two for plans routing to get the material back to the reviewer, and two to four weeks for the reviewer to get the material back to the top of the pile and actually look at it, at which point they’ll likely through out another correction notice because they’re under tremendous pressure to get stuff out of their pile. Every time this happens, it costs another one to two months of land carry as I calculated above. Plus, the reviewers charge $300/hr for their extra time on all this stuff, so corrections have actually become a revenue center for DPD!

    I’ve had reviewers admit to me that they love my projects, think they’re great and want them to get built, but the process has become so dysfunctional that there’s no way to minimize this crap. It’s expensive, frustrating, and completely unnecessary.

  23. 23
    MisterBubble says:

    Oh, lord. Ok, Greg. You’re right. It’s the regulation.

    Regulation has doubled the home prices in Seattle since 2007. It has nothing to do with out-of-control lending, the flippers at Canal Station, the dark windows at 2200, granite countertops, bamboo floors, 23-year-olds buying $600,000 Ballard homes with No Money Down, the Big Kahuna, or the tidal wave of speculative home-buying that has crashed onto nearly every other market in the country.

    No, Greg….it doesn’t have anything to do with any of that stuff. It’s only because We’re Special Here(tm). I never thought I’d see the day when Seattlites would start bragging about their regulatory process, but you’ve proven me wrong.

    I sure do hope that we get these land-use people under control! Pretty soon, our home prices are going to be infinite!!

  24. 24
    Chris says:

    Mr. Bubble,

    your confusing the issues. Greg has correctly pointed out process has driven up replacement cost, but at the same time prices have risen faster than costs due loose lending and group psychology.

    It will be interesting to see how replacement costs are affected by the slowdown once the margin is eaten away by reduced sales prices. I suspect that first, the margin on condo projects will be compressed to the financiable minimum, say 15% on cost for a condo project, less for an apartment. Second, contractors will lower bids, as they have been doing in Phoenix and SoCal where they are jumping all over new work. Finally, as the costs will not decrease as fast as the prices, land values will contract in most places. I also think units will become much smaller on average in response to tighter lending, which will be a somewhat steadying influence on revenue/SF

  25. 25
    biliruben says:

    Assuming that the regs are truly as onerous as you say, Greg, and I have no reason to think you would exaggerate the cost impact, the fact remains that new construction still must compete on price with existing structures, no?

    Yet it appears that developers are still building at a feverish pace – far out-pacing demand. They must still be making a profit, no? I assume they are pretty smart and wouldn’t build if they couldn’t make a buck or a million.

    Are you suggesting that they had in the past been making outlandish profits, but now, due to regs are simply making a decent living? Forgive my lack of tears.

  26. 26
    deejayoh says:

    Tim’s post was about zoning issues. Greg’s response was primarily about permitting issues. They are different things. Re-read Greg’s post – it’s basically a rant about how hard and lengthy the process is:

    Even leaving aside development restrictions such as setbacks, height limits, parking requirements, open space minimums, and other such things, let’s look at one particular piece of the puzzle: permit review times.

    I would argue this is simply a queuing problem with the bureacrats. We’ve doubled the number of construction starts in the last few years. The city/county didn’t staff up to handle it so builders are bearing the cost of too many permits being handled by too few people. That has nothing to do with zoning (which are the rules about HOW you can use the land) and over time the problem will solve itself as all the marginal builders go under and construction starts drop.

  27. 27
    gregory wharton says:

    deejoyah,

    I strongly recommend that you read the two articles I linked to. They directly address the cost impacts of zoning and other land use regulation in a very quantifiable and analytical way. The second one in particular, The Causes and Consequences of Land Use Regulation: Evidence from Greater Boston, is very eye opening.

    Permitting costs are a part of land use regulation. No land use regulation, no permits. I was trying to point out that even beyond the large costs of land use regulation in and of itself (7% of hedonic land value per regulation according to the studies), the implementation of the permit process has multiplied those costs even further.

  28. 28
    Toilet Duck says:

    Talking about Occam’s Razor, the powers that be avoid the concept of unfettered faith in the unregulated free-market attitude towards real estate as having any role in this mess.

    The elephant in the living room is getting so big his head’s going to bust through the roof.

  29. 29
    Mark L says:

    New construction does seem to command a premium over older construction (and over conversions in the case of apartment-condos). But it is tough to compare apples to apples, given all the new “necessities” like granite countertops.

  30. 30
    biliruben says:

    It commands a premium, no doubt. Whether it should, given today’s building standards is another question.

    But it has always commanded a premium. That doesn’t stop it from competing with existing homes – you just get less home or a crappier location when you buy new.

    As an aside, there was an interesting study done a few years ago showing that in the Seattle area, existing houses appreciate much more than new houses.

  31. 31
    gregory wharton says:

    Biliruben,

    You’re right about existing houses appreciating faster than newer houses. Part of it is difference in finish detail quality (they don’t build them like they used to), but it’s typical of areas where land use regulation heavily restricts new development.

    The normal pattern of pricing is for older houses to be cheaper due to depreciation and maintenance cost issues. I recently traded in a 1924 craftsman for a newly-remodeled 1950s ranch house and my maintenance expenses plummeted to next to nothing from lots and lots. Newly-constructed houses have very little by way of maintenance costs.

    Of course, older houses were built to last a lot longer than houses these days. Most new builder-grade spec homes are built to a specification which virtually guarantees they’ll self-destruct after thirty years (the term of a typical mortgage). Old houses tend to have been built more strongly than that (though not always…buyer beware…especially when it comes to foundations and infrastructure). The ones that are still around are the better ones, most the bad ones have been torn down or fallen apart over the years.

    Another big problem with old houses is outdated infrastructure. Not only do sewer connection pipes have to be replaced every 50 years, but wiring and plumbing wears out too. Look beneath a 1920s craftsman’s charming skin and you’ll find knob-and-tube wiring, calcified drain pipes, grossly inefficient heating systems, a complete lack of insulation, and a host of other problematic issues. New houses blissfully lack all of these problems.

    But building systems can be replaced. Much harder to fix are outdated planning built into the structure. In the early part of the twentieth century, kitchens were small and often tucked away where nobody wanted to see them. Bedrooms were also small because both people and the beds they slept in were smaller. Many of them lack closets because they didn’t have that many clothes or other junk, and what they did have was often stored in armoires. Formal living and dining rooms were the rule rather than the exception, and were intended for show more than day-to-day use.

    We just don’t live that way any more. A new house is better adapted to our modern culture and living patterns. You can remodel an old house to fit (which I just did, though I chose to start with a ranch house and its much more modern living pattern than a bungalow), but it will always be a bit of a mismatch.

    Which is all a bit off-topic, but the point is that the typical economic pattern is for older houses to be worth less than newer ones. When that pattern reverses, it means that some deeper force is at work in that market. Since financing and availability of credit is neutral on the question of house age, the explanation must come from somewhere else.

    The studies that have been done suggest a strong positive correlation between price premiums for existing housing stock over new and land use regulation. Older houses are very often non-conforming under the new codes (i.e. they couldn’t be built that way today, even if we wanted to do so). Another factor driving price premiums on old houses is construction quality and finish. Because labor was extremely cheap back when those older houses were built, they have a lot of finish detailing that was labor intensive. Labor is very dear now, so those details cannot be reproduced except at great cost. Some materials are also now unavailable. Newly cut wide-plank old-growth fir flooring can’t really be had at any price now, and salvaged material is expensive. There are premiums associated with these things too, but on aggregate they don’t explain the general divergence as well as land use regulation does.

  32. 32
    bigdollordog says:

    what goes up comes down said,

    Is zoning the reason the number of listings keeps going up? Greg if zoning was the problem why didn’t it show up in the 90’s — a direct answer would be fine.

    *******************
    I’m not Greg but all this Zoning stuff started in 1996, about the same time as the big price run up, this could be a good class project for somebody — and where did it start? It came directly from a NGO meeting in south America, and was to spread around the world, its prime directive to stop private ownership of land and force people into communal living areas, and it seems to be working, protecting the environment is just a red herring, do your research there is a paper trail to follow

  33. 33
    bigdollordog says:

    zoning stuff that starting in 1996 known as GMA and it related laws are what the issue is here not normal zoning laws, it effects all homes NOT just “evil developers”

    from reading this people don’t really understand what its like, with all the zoning stuff, we are not taking about common sense stuff like lot not letting somebody build a house in a swamp or a gas station going in a residential area; here is an example to think about:

    A little old lady goes to home depot, buys a fish pond puts it in her back yard, then a Gov. worker sees it on the satellite photo, ear marks it as a wet land, (no joke) then a year later a neighbor wants to put in a garden window but a Gov., adds a $10,000 wet land fee to a simple garden window project, then that same little old lady goes back to home depot and buys some bamboo and a year later it spread to the neighbors yard on the other side, then that neighbor tries to ad a garage but a city arbolist comes out and puts a red tag on the bamboo and calls it an endangered exotic tree, boom another $10000 fee just to get the city to remove the red tag off the bamboo shoot, all this stuff gets added to the price of the homes and YOU WILL PAY, even if you live in an apartment next to the little old ladies fish pond YOUR RENT WILL GO UP!

  34. 34
    Denny Retrograde says:

    I can see why somebody is grumpy having to revise his plans after DPD review.

    (http://www.monadnock.net/contributors/wharton.html)

    Foundation
    by J. Gregory Wharton

    Immense solidity, these walls,
    Which stand now material,
    So smooth and straight,
    Just as I imagined.

    The space within
    Merely potential,
    Until I came here
    To wrap it in veils of concrete.

    Now a massive straight-edge
    Drawn from a thread
    Originating within me,
    Like a wire pulled from a die.

    Yet, this is not all there will be.

    A bold precursor,
    This anchor buried
    In the earth, forgotten,
    But always trusted.

    From this sound platform,
    So cool to the touch,
    Will rise real the dream.
    I see it in my mind,

    And soon it shall Be.

  35. 35
    deejayoh says:

    I’m not Greg but all this Zoning stuff started in 1996, about the same time as the big price run up, this could be a good class project for somebody — and where did it start? It came directly from a NGO meeting in south America, and was to spread around the world, its prime directive to stop private ownership of land and force people into communal living areas, and it seems to be working, protecting the environment is just a red herring, do your research there is a paper trail to follow

    And then the black helicopters came and hauled them all way…

  36. 36
    biliruben says:

    No doubt old houses have their drawbacks, Greg. I live in one also. Great insights.

    My guess as to the reason for the appreciation disparity between existing and new was due to the value of the land. Existing houses, on average, are on prime lots that appreciate significantly faster than the lots where new homes are built. This is particularly true in the Seattle area with all the variety of views and hills making no two lots the same. Also, there was a study in one of your industry rags which looked and variability in land prices vs. housing (improvement) prices. Land prices had 3 times the variability of housing prices. That meant that during the long stretch of appreciation, the nicer lots with old homes whose value with in large-part in the land, appreciated faster. We may see a reversal of that trend in the coming downturn.

    Another possible reason is the “drive it off the lot” effect. Once you buy a new home, it is no longer new, so it no longer commands a new house price-premium.

    Interesting stuff.

  37. 37
    bigdollardog says:

    deejayoh said,

    And then the black helicopters came and hauled them all way…

    *************
    too many impact fees and not zoned for Helicopters, they just use black vans
    I remember one time at WTO, protests, I seen a guy get taken away by a black van, guys jumped out, they just looked like the guys from MIB, I was like hey, where you taken that guy, I still wonder what happeded to him

  38. 38
    Joe Kennedy says:

    Pretty soon everyone in the industry will be blaming the local media for the crashing real estate market. They’ve been doing it around the country for a couple years now.

  39. 39
    phil fischer says:

    I hate you, I hate you, yet I love you. My wife and I are at our wits end. We actually have 500K in life savings, and a dream home in Kirkland but need something bigger for the three plus kids. We have been looking and looking and it seems that some of the owners are not budging on prices. Should we wait? Your site was really informative and helpful.

    I think we will wait.

    p

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